Due to the breathtaking rise of dry-bulk rates over the past few years, there's a plethora of these shipping companies in the stock market today. None, however, has been listed as long as Excel Maritime
Given that the Baltic Dry Index more than doubled the prior year's level, you might be surprised to see that Excel boosted its revenues by only 32% in the third quarter. The primary explanation is that Excel charters out a significant amount of its fleet for medium-term work, and trades spot market exposure for revenue visibility. For the third quarter, Excel had spot exposure of 43%, a modest increase over last year. Those spot rates brought in fully one-third higher revenues than so-called period rates.
Fleet utilization weighed on revenues as well. Curiously, Excel failed to mention the impact of its offhire days, the time during which a ship is unavailable due to inspections and/or maintenance. This is akin to a refiner like Valero
In each quarterly release, DryShips
Compared to the actual business operations and outlook, this may seem like nitpicky stuff. But I am more than a bit bothered that Excel's printed disclosures to shareholders seem lacking, even after all these years as a public company.
As for the dry-bulk outlook, I haven't left myself much room to expound on this, but it's fundamentally about Chinese demand. I personally don't find concerns about China's ability to scare the market into dropping rates very credible. Until that economy cools off, I don't see the dry-bulk firms' hot streak coming to an end.
Speaking of cooling off, check out this tanker company's results.
Not all tanker companies were dragged under, however.
Thanks to high spot market exposure, DryShips' profits were scary -- scary good.